MacFarlane v. Canadian Universities Reciprocal Insurance Exchange –Should A Professor Warning Others Of A Sexual Predator Colleague Be Covered By Her Employer University's Liability Policy?

A recent decision of the Ontario Superior Court of Justice, MacFarlane v. Canadian Universities Reciprocal Insurance Exchange, 2019 ONSC 4631, answered the question of whether a university's insurer had a duty to defend a professor accused of defaming a former colleague in relation to statements about unproven allegations of sexual misconduct. The decision turned on whether the professor accused of certain defamatory acts was acting on behalf of the university at the time of the alleged acts, and thus falling under the definition of an "Additional Insured" as defined by the policy. This decision was also a good reminder that a duty to defend can be easily triggered by pleadings as it is a much broader duty than an insurer's duty to indemnify.

Background

Professor C was terminated from the University of Windsor. The termination was subject to a Non-Disclosure Agreement between Professor C and the University. Following the termination, Dr. M, who was employed at the University, made various allegedly defamatory statements against Professor C, including to Professor C's new employer, warning them that Professor C was a sexual predator. Those defamatory statements related to unproven allegations of sexual misconduct/harassment involving students at the University of Windsor. Professor C brought a defamation action against Dr. M. Dr. M sought coverage under the University's liability policy.

The University's insurer, Canadian Universities Reciprocal Insurance Exchange ("CURIE"), provided liability coverage to employees of the University facing defamation claims, but CURIE denied coverage to Dr. M on the basis that Dr. M was not an insured under the policy as defined and thus CURIE did not have any duty to defend or indemnify Dr. M.

The Key Coverage Issues

The first issue before the court was whether Dr. M was acting within her employment capacity when she made the defamatory statements and, specifically, whether she was acting in her capacity as a professor employed by the University of Windsor and making the statements on the University's behalf. If so, then Dr. M was an "Additional Insured" under the CURIE policy and entitled to coverage. Also at issue was whether the pleadings triggered CURIE's duty to defend Dr. M if she fell under the definition of "Additional Insured".

The Court's Analysis

In considering whether Dr. M had acted in her employment capacity, the Court noted that in making the defamatory statements, Dr. M identified herself as...